"Big tree attracts the wind! Cayman Islands and Thailand are investigating Binance for providing services without permission."
The world's largest exchange Binance has recently encountered various troubles, as regulatory agencies have launched investigations into its domestic services on the grounds of providing "unlicensed" services. Following the UK Financial Conduct Authority (FCA) issuing a ban on Binance's derivative services in the UK and the Financial Services Agency of Japan warning against unlicensed services, regulatory authorities in the Cayman Islands and Thailand have also issued warnings to Binance for providing services without proper authorization.
Table of Contents
Cayman Islands, a Tax Haven: Investigating Binance for Providing Services in the Region
The Cayman Islands, with a population of only sixty thousand, is a well-known offshore financial center and often referred to as a tax haven. On July 1st, the Cayman Islands Monetary Authority (CIMA) issued a notice clarifying that no entity associated with Binance is registered in the region. The regulatory authority is also investigating whether any entities related to Binance are providing unlicensed services within the jurisdiction.
Thailand SEC: Binance Illegally Providing Services, Subject to Fines upon Ruling
The Thailand Securities and Exchange Commission announced that, based on a report, Binance has been continuously offering unlicensed trading services and has failed to clarify this with the authority within the given timeframe. Providing unlicensed trading services violates the Digital Asset Business Law, and the SEC will take legal action, which may result in penalties or fines.
Exchanges commonly offer unlicensed services across borders, posing challenges for operators
Not only cryptocurrency exchanges but also online brokerages like eToro have been providing services across borders without the necessary approvals from local regulatory authorities for years. In the case of Taiwan, the Financial Supervisory Commission finds it challenging to regulate overseas online brokerages like eToro and can only educate investors, informing them that they will not be protected in case of consumer disputes when using such platforms.
International cryptocurrency exchanges like Binance, with a wide range of cryptocurrencies and derivatives, find it difficult to comply with regulations in various countries or lack specific guidelines to follow. Operators are usually willing to cooperate with regulatory requirements and hope for the establishment of relevant regulations. Despite measures such as banning local IP addresses from accessing services – as Binance did by prohibiting services to U.S. users as early as 2019, redirecting them to another platform, Binance US, and eventually blocking IP addresses by the end of 2020 – preventing users from utilizing the services remains a challenge.
Taiwan's Virtual Currency Draft Only Targets Domestic Operators
Taiwan currently does not provide legal licenses for cryptocurrency exchange operators but focuses on regulating anti-money laundering measures. In the virtual currency anti-money laundering rules implemented by the Financial Supervisory Commission on July 1st, only operators registered domestically are included. It is presumed that Taiwan's treatment of overseas exchange operators is similar to the eToro case.